This is going to be tough on businesses, and could increase bankruptcies, as businesses are unable to pass on higher inflation costs to consumers because of the recession.
WASHINGTON (MarketWatch) -- U.S. producer prices rose 1.8% in June, eclipsing economists' expectations and climbing by the most since November 2007, the Labor Department reported Tuesday.
Excluding volatile food and energy price inputs, producer prices were up by just 0.5% last month.
Still, this so-called core rate also outstripped economists' expectations: Analysts surveyed by MarketWatch had the adjusted PPI rate for June to rise by 0.1%.
Economists had pegged overall producer prices, which tracks inflation at the wholesale level, to have risen by 1.2% in June, from 0.2% in May.
Energy prices soared at the producer level in June, rising by 6.6%. In May, they were up 2.9%, on the heels of having fallen by 0.1% in April.
Prices for gasoline, home heating oil and liquefied petroleum gas all spiked in June, the data showed.
Food prices rose by 1.1% in June, a reversal after falling by 1.6% in May.
In spite of the overall June increase, producer prices are off 4.6% over the past 12 months.
Over the past year, however, core PPI prices are up 3.3%.
In June, prices for intermediate goods rose 1.9%. Further back in the production pipeline, prices for crude goods climbed by 4.6%.
Economists and investors have kept a sharp eye out for signs of inflation creeping into the U.S. economy, in light of the massive stimulus measures adopted by Washington several months ago.
Also Tuesday, the government reported that U.S. retail sales increased by 0.6% in June, marking the best monthly performance since the 1.7% growth seen last January.
